2016-2020_Financial_Plan_Web

Economic Overview

BRITISH COLUMBIA

British Columbia’s GDP is expected to come in at 2.7% during 2016 with unemployment forecasted at 6%. US economic growth along with a weak Loonie should benefit the export, manufacturing, tourism, film, and television sectors. The housing market is expected to have another strong year with prices estimated to appreciate 6.5% due to tight supply. Home sales have reached a pace that would absorb the stock of units on the market in less than 4 months, a pace not seen since mid-2007. The Bank of Canada continues to warn of real estate overvaluation in the Lower Mainland and has voiced concern over homeowners’ ability to service debt when interest rates begin to “normalize”. The wealth effect in BC can be seen by examining the spending habits of consumers. As real estate valuations climb, consumers spend in correlation to their perceived wealth as evidenced by 3% more spending in 2015 in comparison to 2014, the highest rate of any province. Surveys reveal that BC’s household confidence is currently at a post-recession high.

The cost of living continues to rise for British Columbians as food and electricity costs, MSP premiums and auto insurance rates are expected to increase in 2016. BC Assessment’s latest annual real estate assessments reveal increases of 15% to 25% for detached properties in the City of Vancouver with similar increases in surrounding suburbs. In dollar terms, this equates to an increase of $200,000 to $400,000 for detached houses within Vancouver. These higher valuations will likely drive up property tax bills for many property owners.

Gross Domestic Product 2012 ‐ 2016

+0.0% +0.5% +1.0% +1.5% +2.0% +2.5% +3.0% +3.5%

Canada USA BC

2012 Actual

2013 Actual

2014 Actual

2015 Forecast

2016 Forecast

Full-time employment grew 2.4% last year. The strength of the BC labour market and the sharp decline of Alberta’s oil and gas industries resulted in more than 24,000 people who call BC home migrating back to the province. This is the highest in-migration rate from Alberta in the 33 years that the statistics have been recorded.

2016-2020 FINANCIAL PLAN

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